With everything that’s going on at the moment, it’s normal to start worrying about your financial wellness and to have questions about what to do or what’s going to happen next. For this reason, we have asked our readers to send us their most burning money questions which we answer each week here on Medium in a weekly series called Money Questions. So, if you have a question, you can submit it here — if not, continue reading below.
Question: How should I prepare for a possible recession?
Given the current situation, there is a fair chance that we’ll see a recession. To help prepare here’s several actionable steps to consider:
- First, think about paying off any high-interest debt you may have. It might be worth paying it off as soon as possible to prevent high interests payments that might eat away at your income.
- If possible, try building an emergency fund if you don’t have one yet. A good emergency fund should typically have three to six months of your average monthly expenses. This fund should be easily accessible if you need to use it; usually, it is best to keep it as cash in a bank account (e.g. a flexible savings account).
- To help build this buffer, consider cutting on non-essential expenses. What are non-essential expenses? Anything that is not something you must pay for every month (like your rent, bills, etc.). This typically includes entertainment, takeaway food, etc. — given the circumstances, you probably have already cut some expenses here.
- Think about what you can do on the income side; for example, work on your career (it’s a great time to update your resume and reach out to your network), your education (find a cool online class or work on that key exam) or find a side hustle (think about your core skills and how they might be useful right now).
Keep an eye out — more questions and answers to come! In the meantime, submit your question here and we’ll make sure to respond.